Ex-Senate aide eyed in Medicare leak

A Washington law firm and a former congressional aide are facing scrutiny over a leak of sensitive details on Medicare Advantage payment rates that may have sparked hundreds of millions of dollars in stock trading on insurance companies before the information was made public.

Sen. Chuck Grassley (R-Iowa) is questioning whether a lobbyist at Greenberg Traurig, a K Street law firm, tipped off Height Securities, a political intelligence firm, regarding a soon-to-be-announced increase in Medicare Advantage rates. Height quickly put out an investor alert before the markets closed on April 1 — and before the government announced it was raising the rates after earlier proposing the largest cuts in the history of Medicare Advantage.

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POLITICO has obtained the Greenberg Traurig email under investigation by Grassley. It was sent by Mark Hayes, a longtime former senior aide to Grassley on health policy and Medicare, to Justin Simon, the top health analyst at Height Securities. Hayes’s email, sent a little more than an hour before the formal Medicare rate announcement, said “very credible sources” said the Medicare agency would “address” Medicare Advantage cuts.

Health insurance stocks went soaring within minutes of the Height Securities advisory, which is now “the subject of a preliminary probe from the Securities and Exchange Commission,” The Wall Street Journal, which first reported the email, said in Wednesday’s edition. The Securities and Exchange Commission declined to comment to POLITICO on any ongoing investigation.

Grassley launched his own investigation into Height Securities’ use of what he described as “political intelligence” about two weeks ago.

In an April 9 letter sent to Greenberg Traurig’s outside counsel and obtained by POLITICO, Grassley wrote, “I understand a lobbyist at Greenberg Traurig sent an email to Height Securities and others regarding the CMS announcement on the Medicare Advantage (MA) policy rate change.”

The Grassley letter, which doesn’t identify Hayes, notes that the Greenberg Traurig lobbyist sent the email to Height Securities at 3:12 p.m. on April 1. The Height Securities notice to clients went out almost a half-hour later. The CMS announcement came out close to 4:30 p.m.

“Trading volume for the top three affected stocks jumped by $662.8 million in the final minutes of trading,” Grassley wrote. “Stocks for several large health insurers rose sharply in advance of the public announcement.”